Updated from Sunday, Sept. 21
Lawmakers were reportedly grappling Sunday over what to add to the Bush administration's plan for a sweeping rescue of the financial system.
The plan didn't appear in danger of being delayed or stopped, according to a report in
The Wall Street Journal
. But some members of Congress want provisions inserted that are aimed at protecting taxpayers -- who will be on the hook for the plan's cost -- and providing relief to homeowners, the report said.
The Treasury Department wants Congress' blessing to buy up to $700 billion in bad mortgage-related debt. The hope is that such purchases will stem the financial crisis that has shuttered investment banks, forced mergers and caused panic among investors. At the root of the crisis are soured mortgages, but Wall Street amplified their impact using derivatives and leverage.
The plan would raise the limit on the nation's debt to $11.3 trillion from $10.6 trillion to enable the Treasury to carry out the rescue
But disagreements are emerging over what to add to the proposal. Perhaps the biggest dispute concerns whether firms that sell bad debt to the Treasury should have limits placed on what they pay their executives, the
report said. Some Democrats are pushing for such a provision, but Treasury Secretary Henry Paulson is resisting such efforts, the report added.
Paulson is resisting efforts to limit the pay of executives whose firms participate in the program and plans to fight it "hard," the
reports, citing a person familiar with the matter. Paulson fears the provision would render the program moot, since many firms might choose not to participate.
The Treasury's latest draft, sent to Congress on Sunday, also could let overseas firms participate, and it leaves the door open for hedge funds to sell distressed assets to the government, according to the
The Treasury and
began discussing the plan with congressional leaders Thursday. News of the talks late in the week, along with the
Securities and Exchange Commission's
decision to temporarily prohibit short-selling, helped the markets recover much of the massive losses they incurred earlier in the week.
The government finds itself crafting a massive rescue for the financial sector after more piecemeal attempts by the Treasury and Fed, including a massive loan to
and the takeover of
, have failed to stem the sector's hemorrhaging.
This article was written by a staff member of TheStreet.com.